First-Time Homebuyers: Shop Around!

The Motley Fool is in Seattle, visiting online home and real estate marketplace Zillow. In the following video, the Fool's Austin Smith meets with Zillow Mortgage Marketplace Director Erin Lantz to learn more about how ZMM works and whom it serves.

Lantz reflects on ZMM's strengths and the challenges it faces going forward. She also offers some advice for first-time homebuyers.

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Austin Smith: Do you have any advice for people looking to take out a mortgage today, looking to buy a home? Common pitfalls that they should avoid?

Erin Lantz: The No. 1 thing is be sure to shop around. I can't tell you how many times we see people who spend all this time and money and energy negotiating the price that they're going to pay for their home, and then they get to the very last point when they need to actually buy it and they've spent no time looking into their mortgage options.

We think it's really important. Even small changes in your interest rate can mean thousands of dollars over the life of your loan, so shopping around, making an informed decision, and working with a lender that will take care of you is absolutely the biggest piece of advice.

Smith: As people look at the Zillow Mortgage Marketplace division, what are some of the real strengths that you guys have in that division?

Lantz: Starting out with our position of leadership in mobile, we were in mobile early and -- really to our surprise -- we're seeing extreme consumer adoption of even complex products like mortgage shopping on mobile. I think that's a place where we're really well positioned.

Secondly, on the purchase side, especially given our organic source of traffic from Zillow and seeing what we've been talking about, we know that refis are not going to be here forever, so we feel like we're in a real position of strength being deep in the real estate vertical and deep in the purchase market.

As rates rise, we're well positioned to introduce lenders to a continued stream of purchase contacts and give lenders the tools to convert those more effectively. I think that's where we feel really strong.

The biggest challenge is letting people know about us. Most people on Zillow still don't know that we exist, that ZMM is part of Zillow, and certainly off of Zillow our awareness is limited. That's a huge opportunity for us, especially given the size of the market.

We estimate lenders spend $11 billion a year to advertise home loans to consumers, and we're just a small fraction of that. Gaining a bigger piece of that and building awareness of ZMM as the place for consumers to find lenders, I think that's the biggest challenge that we're facing right now.

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